Business Funding without the Banks: Alternative Lenders and Capital Opportunities

The excitement for launching a startup starts to fizzle the moment you’re denied bank funding.

Suddenly, you’re at a scrambled because your dreams of entrepreneurship begin to fade. Or, you’re left troubled knowing initial orders rolled in but there’s no way you can satisfy them because you’re lacking capital.

These problems exist for established businesses, too.

Failure because businesses are unable to create stable revenue streams happens often. The failure spurs when businesses do not have the capital for operations and growth. Nor, the funds to run essential advertising and marketing campaigns creating enough presence to turn a profit.

What can a small business do to secure funding without the help of banks?

Tap a Credit Card

Expenses for your business is a tax write-off so already this boost in the capital is looking positive. Add cash back and/or points and tapping a credit card doesn’t sound too bad if you only need a small amount.

Those with a decent available credit — and some craftiness with 0% APR transfers — can float using this method.

But:

Credit cards carry high APR’s and tapping them could harm your credit score. This furthers the problem of obtaining bigger loans you may need months down the line. In all, this should be a last-ditch-effort for business funding since it’s placing the financial burden on you and not the business.

Ask People Close to You

Do you have a friend willing to lend you money? What about the family? Or, maybe a distant relative?

Don’t just approach them asking for a hand-out — make it a real business transaction:

Share the problem and plan of action

Report current and projected (locked-in) sales

Define a repayment plan

Get everything in writing

Your family and friends may believe in you and the business. It’s likely you’ll receive fair terms when borrowing money because they’re close. The only issue with this opportunity is how messy finances and relationships mix. Missed payments create a snowball effect ruining the business and the relationship you have with these individuals.

Get a Check Advance Loan

Do you have yourself on the business payroll? This gives you an opportunity to take on a small, affordable loan using the paycheck as leverage. This could float the business and complete locked-in orders bringing revenue up to get to its next milestone.

These short-term loans tend to carry higher interest but offer flexible repayment options. Do your due diligence when working with short-term loan companies fully understanding the loan terms and details. This quick injection of capital does present a viable option when it’s make-or-break with business.

Crowdsourcing

Tapped friends and family but think you could generate more capital through community efforts? If so, then crowdsourcing is a great option! This calls on the community to contribute funding set to your needs. This amount should be within reason else you chance failing to hit crowdsourcing goals.

What platforms could you explore?

Kickstarter

GoFundMe

Indigogo

Success on these platforms pairs with how well you update those donating. You should provide weekly (even daily) updates with how you’re progressing the business. This will be like how you’d share better content your social. Or, completely detailing how the funds will help you grow including an action plan and milestones.

Try Peer-to-Peer Lending

Macro investing communities and platforms cut the bank ‘middleman’ from the equation. Instead, you’re tapping peer-to-peer lending creating far less hassle when you’re in need of business capital. These require expected details like contact details, financial statements, and references.

You could try:

Upstart

Lending Club

Peerform

Or, tap modern crypto-lending platforms like CryptoLend or Nexo. The terms and agreements with P2P lending are often far lower and more flexible than working with a bank. Approval and capital deposits are typically faster, too.

Don’t Let Capital be the Limiter to Your Entrepreneurship

Capital is the lifeblood of business whether it’s building a niche site requiring $50 – $100 for startup costs to a couple thousand for getting inventory for an e-commerce store. There are more ways than one for acquiring capital.